Trump in Asia: Back to the Future?

DEVIN STEWART: Hi. I'm Devin Stewart here at Carnegie Council in New York City. Today I'm speaking with Chris Nelson. He's a fellow at the Sasakawa Peace Foundation in Washington, DC. He is also publisher of the famous Nelson Report, which is a daily accumulation of intelligence and information—

CHRIS NELSON: That's a good word for it. I like that word.

DEVIN STEWART: —on U.S./Asia affairs, with a particular focus on trade policy toward Asia.

Chris, it's so good speaking with you today.

CHRIS NELSON: Devin, same here. I kind of wish I was in New York because right now we're working in a—you know, Trump's right about it being a swamp. Unfortunately, he's one of the creatures feeding the problem. I'm sure we'll talk about some of that.

DEVIN STEWART: Sure.

CHRIS NELSON: What's up? What can I help you with?

DEVIN STEWART: You have been gathering information on trends in U.S. policy toward Asia for decades, after you worked on Capitol Hill in the early 1980s.

CHRIS NELSON: Really, the 1970s.

DEVIN STEWART: Then you started gathering this information that has been crucial for people in Washington and outside Washington to understand what's going on on a daily basis.

What do you see as an emerging—if there is at all an emerging—approach toward Asia for the Trump administration?

CHRIS NELSON: Thanks for the kind words. I've been doing the daily report for 30 years, which is terrifying when you think about it. It started mainly because of the then-U.S./Japan trade wars. I found that I had to explain every day to the Japanese audience, and by sort of trickle-down, the Asian audience, where the Americans were coming from.

I mention that because, with Prime Minister Abe due in town next Thursday night [February 9], I think it is, a major topic is going to be autos and auto parts and stuff. The things that you've been reading and saying—it is absolutely "déjà vu all over again." That relates to General Mattis's trip, who is, I think, in Seoul today and will be in Tokyo shortly. The kinds of things he is being asked to say and do are "déjà vu all over again" from the late-1970s, when Jimmy Carter came in announcing he was going to withdraw American troops from South Korea, and everybody freaked out, including Dick Holbrooke, the then-newly-minted assistant secretary, who asked congressional help to undo "the stupid decision my president has made on this."

So, in many ways, we are back to the future of reassuring every friend and ally—and adversary—we have out there that American constancy is there, we are not going to change that, and all that. In some sense, that is always the case. Any new administration has to deal with it. But the difference this time is that during the campaign Trump did not present well on those kinds of issues as far as Asian observers and professionals, especially in the Republican Party, were concerned, which is why so many of them made statements or signed letters opposing his candidacy on the basis of the substance of what he was saying about alliances and nuclear weapons and trade and all that stuff.

We are in a period now where uncertainties—and therefore reassurances—are at the front of everybody's view screen and newspaper, etc. I'm rambling here, but this morning the front-page Washington Post story on the left side is "Trump Disses Turnbull," the Australian prime minister. This is, outside of Japan, the most important and consistent ally the United States has, and here's Trump insulting the hell out of Turnbull—and hanging up on him, apparently, halfway through the phone call.

Now, that story was leaked. It sure wasn't leaked by the Aussies, so it had to have been leaked out of the White House, which itself is interesting. Really, who would leak that? Why would they do that? Are they trying to show everybody that Trump is tough and that our allies can't do stuff and not be called on it by Trump? I think that's one of the interpretations.

You know, the atmosphere is unsettled and remains to be determined, even though the questions are the questions that have been asked every time a new administration comes in, for the last 40 years really.

DEVIN STEWART: You're saying that we're back to the future. Why have we gone backward? What are the forces?

CHRIS NELSON: I guess I didn't explain it quite right. I think we are back to the future. But it's also every time you change administrations you have to go through this period of reassurance and restatement—"We're still there; we still love ya."

The difference this time is that Obama and Froman mishandled the Trans-Pacific Partnership (TPP) badly and it lost. And Trump comes in with very aggressive statements about trade, so really, we probably have more need for reassurance than we have in the last 20, or even 30, years.

So yes, the questions are the same, but the need is much more substantial this time than it has been in a long time.

DEVIN STEWART: What do you see for U.S. trade policy toward Asia? Do you see anything hopeful?

CHRIS NELSON: There's no question it's going to be more aggressive. If there's one thing we have seen so far in—and I'm being sarcastic now—the Trump-Bannon administration, it is that what they said they want to do and are going to do, by god that's what they're going to do, or at least they're going to try.

Number two, Trump has made very clear, all during the campaign and since then, in what he said, that as a businessman everything is transactional, everything is a deal—"You do something for me, I'll do something for you"; "You don't do something for me, I'm going to say or do something nasty to you." That's the way his brain works and how he sees things.

Now, we have seen on strategic issues, with his phone calls, that he understands the reassurance part of the strategic issues. But if it's an economic or a social policy issue, he doesn't see, as far as we can tell, any need to be either reassuring or accommodating. He's going to do what he said he's going to do.

So one of the things we're all on edge about is: Does he really mean this stuff about citing China on currency, even though China has not manipulated its currency legally for the last probably three years; and does he really mean it about all these tariffs and all that? Will Republicans on Ways and Means go for a tariff war with Asia? We don't think so. And certainly, if Mr. Ross is confirmed as commerce secretary, it's kind of hard to see him going for that.

But having said all that, there's just nobody, really for the last seven or eight or nine years, who could be described as pro-China or China lobby, the way you might have been able to say that ten years ago even. So the sentiment for being tough on China and enforcement on China is really strong. That kind of thing sort of drags you all along, doesn't it? It sets up an atmosphere, and potentially a litigious situation, that involves everybody in Asia, because China is everybody's major trading partner.

So we are all expecting to see a much more aggressive, maybe case-driven, approach to China, especially given this new office we have in the White House, the National Trade Council, that is run by the academic Peter Navarro, a guy who has written a lot of books—he's a professor, I think, out of the University of California, Irvine—with no government experience, no operational experience that we know of. But he's a theoretician and he's very hard on China, and he is one of the potential major players on trade policy.

I say "potential" because, of course, with a new office being set up, with no track record, and at the moment only one staffer—a young guy named Alex Gray, who comes from the armed services and is a strategic guy, not a trade guy—we don't know how Navarro and the National Trade Council are going to shape up against the U.S. Trade Representative (USTR), against Wilbur Ross at Commerce, against the special trade negotiator they have talked about doing. Even if everybody is on the same page and wants to do the same stuff—as you know because you've worked here—if you have different agencies with overlapping responsibilities, there is going to be competition. And there's going to even be an argument—"You can't do that; that's my thing," or "That's stupid," or whatever.

So the trade policy is potentially more confusing than almost any other policy that you and I are interested in because of the structural/jurisdictional conflicts that almost seem to be built in.

But having said that, Trump and Navarro and Ross have all indicated a much harder line, a much tougher enforcement line, with China and a willingness to link a lot of China policies to getting along with China, altering China's trade and investment and other behaviors, in very different ways than Obama, who tried to keep things separate so that you had a good climate of cooperation and a chance for North Korea cooperation and all that kind of stuff.

The Trump people look like they are willing to link everything. So we'll see.

DEVIN STEWART: Do you get a sense of what is driving this hard line on trade? Is there any kind of world view?

CHRIS NELSON: Well, there's facts. I mean, since the middle of the Hu Jintao administration, every American businessman in China will tell you, "It has gotten harder to do business here; they are not keeping the agreements they've made; they are reneging on World Trade Organization (WTO) commitments, etc., etc." And don't believe me. Look at the annual white papers issues by the AmCham (American Chamber of Commerce) in Beijing and Shanghai. I mean you could track them. Every year since the famous blowup over the indigenous innovation law, which I think was 2006, that enormous letter to Hu Jintao that was signed by every major business organization practically in the world—U.S.-Japan, U.S.-China Business Council, John Frisbie signed it.

There's ample reason for Trump and Ross and Navarro and anybody else—including C. Nelson—to say that there's a lot of good reason to have a much tougher, more-enforcement/more-reciprocal-focused China trade policy. So if you get a guy like me saying that, a pro-trade Democrat, I think it tells you what the atmosphere is. It's tough, and there are reasons for it. This is not some right-wing "get the Commies thing." It's empirically based on problems getting China to keep its commitments and to show genuine reciprocity on investment and other things.

DEVIN STEWART: How do you see it playing out? Do you see a positive ending here?

CHRIS NELSON: Well, no I don't, because one of the problems that we have seen in the last few years—and it certainly became obvious during the Obama administration—is the United States hasn't figured out how to accommodate the rise of China as a great power. And China is a great power and thinks it should have great-power status and respect and deference and, most importantly, not just a seat at the rule-making table, but rules made to accommodate Chinese views and Chinese interests. Well, that will be hard at the best of times.

When you have a president coming in with an aggressive, transactional view of things, this is going to be interesting. As a reporter and commentator, in a weird kind of way I'm looking forward to it. There's a lot of stuff to write about.

But what the economic consequences would be of a "trade war" with China, that has everybody really worried. Particularly, given the collapse of TPP, it's almost "every man for himself" potential risk here.

DEVIN STEWART: You have a unique perspective, having worked in Congress and reporting on U.S. foreign policy for decades. Can you tell us about the relationship with the U.S. Congress and the making of American foreign policy?

CHRIS NELSON: A good question. I'm glad you asked it.

I had my first job on Capitol Hill in 1970 during the Nixon administration, and I worked for a Republican, believe it or not, on the Foreign Affairs Committee, and was in the middle, as his press secretary, of the debate on the release of the Pentagon Papers and Daniel Ellsberg, and all that kind of stuff.

But what really struck me at the time—again, this is 1970—was that even when the Congress was in uproar and opposition, they saw themselves as the loyal opposition; they saw themselves as partners in the policymaking process. So when you did something they didn't like, the press release said, "We're glad you're moving on this or that, but we wish you had done it differently." It was a whole different mindset.

In the Carter administration, when I was on the Asia Subcommittee—that's how I really broke into the Asia business—Dick Holbrooke and my chairman—Dick Holbrooke was then assistant secretary and Lester Wolff was chairman of the Asia Subcommittee—they saw themselves as partners in developing and implementing Asia policy. Dick actually came on a couple of congressional delegations with us. Can you imagine that today, the assistant secretary for East Asia going on a Republican-led congressional delegation to inspect? People would look at you with their eyes wide. That was the norm in the 1970s. And god knows, we had arguments over stuff—I mean the Vietnam War and what to do about it afterwards and all that.

But here we are now, and I don't see anything out of Congress—whether House or Senate, Republican or Democrat—that sees the Congress institutionally as a partner in the policy process being successful. The congressional role seems to be entirely to pass sanctions, to make things happen, and to criticize whatever it is the president has done. You just never see a press release saying: "This is great. We're really glad you did it and we look forward to working with you as you work with our friends and allies." I'd love to see a press release like that.

It has been at least 15 years or more since I've seen something like that. So it's an attitudinal thing. It feeds this sense of "the institutions are breaking down because people aren't cooperating." We could talk for an hour—and probably should—about how this, in a sense, metastasizes throughout the Congress in all relations with the administration. We certainly saw it during the Obama administration.

So we'll see how it goes with Trump once they get going on tax policy and money issues and things that the members see as their bailiwick and as important for their reelection. Remember, the off-year elections are next year. It's not that far away in political terms. It's going to get more interesting to see how the Republican members, with their own institutional interests and institutional experience and all that, start to define cooperating with the president, supporting him, etc., etc.

My prediction is that the norm will reassert itself and it's going to be much more difficult for everybody.

DEVIN STEWART: What tools does Congress have to affect the president's foreign policy?

CHRIS NELSON: There's always the moral suasion and publicity. You have to believe that Trump, who is an avid reader of The New York Times—even though he keeps calling it a liar and all that, he reads it every morning—you have to believe he doesn't like seeing what John McCain and Senator Graham, and occasionally Senator Flake and other Republicans, say: "This is a stupid policy, and it's dangerous, and we shouldn't do it." So there's always that.

The main influence is money. In order to get a program done, in order to get an alliance as a practical matter funded with whatever, you've got to go through Congress. If it's trade policy, it absolutely has to go through Ways and Means on the House side and Finance on the Senate side. As Obama saw with TPP, he never got anywhere with Senator Hatch because he never solved the biologics PR questions. Well, is Trump going to do any better on that, if and when he gets around to whatever he's going to call "son" or "grandson of TPP"?

Prime Minister Abe is going to try to get Trump to talk about some kind of a bilateral agreement with Japan, building on the internal bilateral agreement that was the heart of the TPP deal. We'll see, because Abe-san has already said that he's got to watch out for Japanese auto interests. They made a lot of deals in TPP because it was a big deal. This is not a big deal; this is just a bilateral.

So Congress is going to have a lot to say about that once they get some specifics. Trump can thunder all he wants, but he can't make people pass funding legislation and approve certain policies. So we'll see.

DEVIN STEWART: A final question, Chris: Looking at Trump's thundering, as you put it—

CHRIS NELSON: Yeah, he's so subtle. You can always admire his understatement.

DEVIN STEWART: He has contentious relationships with a lot of groups and people and centers of power in Washington. As you know, politics in Washington is very much a fight to the death.

CHRIS NELSON: Yes.

DEVIN STEWART: Looking at the various power centers—including the intelligence community, Congress, the courts, lobbyists, lawyers, NGOs, the media, and others—how do you see the Trump administration playing out, and which groups do you think would have the most impact on his term?

CHRIS NELSON: Let me say generally—and I hate to sound like Cassandra or whatever—the process here has been failing for years on a bipartisan basis. The Congress has not been passing budgets properly. They have been resorting to an omnibus congressional resolution at the end of the year that is just a hodgepodge of compromises that may or may not be policy-based. That has been going on for years. Congress has not been doing its job. Once the system gets broken, once you get in the habit of not ever meeting your deadline to get your committee report done or your subcommittee thing done or your budget passed in time to get everything run through the Office of Management and Budget (OMB)—you know, once you get in the habit of doing that, how do you reinvent what you are supposed to be doing?

This has been going on really since the W. Bush administration. You know, you and I could have had this conversation in the middle of the Obama administration and I would have said to you, "As a professional Washington person, I'm really worried. Our institutions are not working properly." And I would have said to you: "There's a reason for Occupy Wall Street, where these people were coming from and why they were angry. There was a reason for the Tea Party. There was a reason for Bernie Sanders. And, god help us, there was a reason for Trump."

This stuff isn't invented by Trump, and you could argue whether Trump is the beneficiary or not, but the fact is our systems weren't working well, and in some ways were broken, and it's hard to put back. That's where we are. I wish I could be optimistic about the outcome in two years or four years, but I'm not.

DEVIN STEWART: So if there's a reason for where we are today, do you see a good next chapter?

CHRIS NELSON: Well, you know, "happy the country that has a hero, sad the country that needs a hero." It would be good to have some leaders who can serve as mediators of truth and were committed to making things work and making people cooperate.

The evidence so far on Trump is his view is "I'll make it happen; you will do it my way." The spirit of democratic compromise does not seem to animate him all that much. I think that's why people are, at the moment at least, frankly pretty scared—especially with a guy like Steve Bannon sitting at the right side, who has very clear, quite difficult views on how it should work and what should be done. This guy is not a traditional American political figure at all, and he is sitting at the right hand. That worries us too.

DEVIN STEWART: Chris Nelson, Fellow at Sasakawa Peace Foundation and publisher of —

CHRIS NELSON: They may disavow me after this. I'm editor of the Nelson Report and "the daily screed" I call it.

DEVIN STEWART: Absolutely, we love your work, Chris. Thank you so much.